January 21, 2021 Peru enacts new tax measures for 2021 The new tax measures, generally effective as of January 1, 2021, affect thin capitalization rules, the special depreciation regime for buildings and construction, and exemptions for income taxes and value-added taxes, among other things. Throughout 2020, Peru enacted tax measures affecting its thin capitalization rules, the special depreciation regime for buildings and construction, and exemptions for income taxes and value-added taxes. Peru also enacted a regime allowing the tourism industry to defer payment of tax debts and apply to pay overdue taxes in installments. The measures are generally effective as of January 1, 2021. Thin capitalization rules Effective January 1, 2021, a new thin capitalization rule applies. The rule, which was published in the Official Gazette on September 13, 2018, in Legislative Decree 1424, limits corporate income tax deductions for "net interest" on all loans. Net interest equals the difference between interest expense and interest income. The interest expense limitation equals 30% of EBITDA (defined for Peruvian income tax purposes as net income after offsetting losses plus net interest, depreciation and amortization). Special depreciation regime In Law 31107, published in the Official Gazette on December 31, 2020, Peru permits taxpayers to elect to apply the 20% depreciation rate (rather than the 5% rate) under the special depreciation regime for buildings and construction. Under prior law (Legislative Decree 1488), the 20% rate automatically applied if the following requirements were met: (i) the construction began January 1, 2020 and (ii) 80% or more of the work was completed by December 31, 2020. Once made on the annual tax return, the election to apply the 20% rate is irrevocable. The change is effective as of January 1, 2021. Temporary tax on net assets (ITAN in Spanish) Peruvian entities must pay ITAN equal to 0.4% of the value of total assets over PEN 1 million (approx. USD 350,000). ITAN can be used as a credit against estimated payments of corporate income tax for the year in which ITAN is paid. It can also offset annual payments of corporate income tax. Taxpayers may claim a refund of ITAN if it is not fully used as a credit. Law 31104, published in the Official Gazette on December 31, 2020, permits taxpayers to claim a refund of all ITAN for fiscal year 2020. The Peruvian tax authority has 30 working days to respond to the refund claim. If the tax authority fails to respond in that period, the refund claim is automatically approved. The change is effective as of January 1, 2021. Income tax exemptions Law 31106, published in the Official Gazette on December 31, 2020, extended the expiration dates of certain income tax exemptions three years, to December 31, 2023. The extended exemptions apply to the following:
The changes are effective as of January 1, 2021. Exemptions for value-added tax (VAT) Law 31105, published in the Official Gazette on December 31, 2020, extended the expiration dates of certain VAT exemptions one year, to December 31, 2021. The exemptions apply to activities and services listed in Appendix I and II of the VAT law, including the following:
The changes are effective as of January 1, 2021. Deferral and installment payments for certain tax debts In response to COVID-19's effects on the tourism sector, Law 31103 created a new tax deferral and installment payment regime for tourist service providers. Under the regime, providers may defer tax debts and apply to pay those debts in installments. Deferral and payment options include the following:
The change was published in the Official Gazette on December 30, 2020, and effective as of December 31, 2020. ———————————————
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